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FM AIT TAIPEI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5554
INFO RUEHBJ/AMEMBASSY BEIJING 6882
RUEHGT/AMEMBASSY GUATEMALA 0134
RUEHMU/AMEMBASSY MANAGUA 0162
RUEHZP/AMEMBASSY PANAMA 0117
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RUEHKO/AMEMBASSY TOKYO 8841
RUEHCN/AMCONSUL CHENGDU 1937
RUEHGZ/AMCONSUL GUANGZHOU 0317
RUEHHK/AMCONSUL HONG KONG 8137
RUEHGH/AMCONSUL SHANGHAI 1144
RUEHSH/AMCONSUL SHENYANG 5905
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHINGTON DC
RHHJJAA/JICPAC HONOLULU HI
RUEKJCS/SECDEF WASHINGTON DC
RHHMUNA/USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 001283 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 6/04/2032 
TAGS: PREL TW CR
SUBJECT: TAIWAN REACTS TO COSTA RICA BREAK 
 
Classified By: AIT Director Stephen M. Young, Reason 1.4 (b/d) 
 
¶1.  (C)  Summary:  In a June 7 press briefing, FM James Huang 
announced Taiwan was severing relations and ceasing 
cooperation projects with Costa Rica after having confirmed 
that San Jose was switching diplomatic recognition to the 
PRC.  Huang blamed Beijing for unrelenting "suppression" of 
Taiwan in the international arena and offered his resignation 
to take "political responsibility" for the loss.  President 
Chen rejected the resignation, saying Huang was not at fault, 
and accused Beijing of "buying" Costa Rica with a total 
assistance and debt relief package valued at USD 430 million. 
 The loss of this long-standing ally will heighten concerns 
over the possibility of a cascading "domino effect" 
throughout Central America and the Caribbean, which hold half 
of Taiwan's remaining 24 diplomatic partners. End Summary. 
 
Damage Control 
-------------- 
 
¶2.  (SBU)  In a press briefing at 9:00 a.m. on Thursday June 
7, Foreign Minister James Huang announced that Taiwan was 
severing diplomatic relations with Costa Rica after having 
confirmed that San Jose had decided to switch recognition to 
the PRC.  Expressing regret over President Arias' decision, 
and claiming it had resulted from "financial promises and 
pressure" from Beijing, Huang stated that Taipei would cease 
all cooperation projects with San Jose.  Huang detailed the 
Foreign Ministry's sustained efforts to monitor the situation 
and hold on to this formerly close ally in Central America. 
 
¶3.  (SBU)  Huang pointed out that prior to becoming president 
last year, Arias had already expressed interest in switching 
recognition to Beijing.  Taipei had noted with "great 
concern" Arias' meeting with Chinese Foreign Minister Li 
Zhaoxing at the UN last September and Costa Rica's vote 
against Taipei's bid to join the WHO this May.  Huang 
insisted that Costa Rica's plan to change recognition to 
Beijing was long-term and not a reaction to recent 
developments, such as Taiwan's application to join WHO or its 
recent success in persuading St. Lucia to switch from Beijing 
to Taipei. 
 
¶4.  (SBU) Taiwan had sought by all possible means to shore up 
relations with Costa Rica and convince Arias, a Nobel Peace 
Prize winner, that his country's best interests lay with 
continuing its 60-plus year relationship with a democratic, 
free Taiwan rather than an autocratic Communist China, Huang 
said.  Nevertheless, he acknowledged, his ministry's efforts 
were not enough to counteract Beijing's unrelenting 
"suppression," and Huang offered his resignation to take 
"political responsibility" for the loss.  President Chen 
Shui-bian later in the day declined to accept Huang's 
resignation, saying the loss was not Huang's fault and 
accusing Beijing of "buying up" Costa Rica with a total 
package valued at USD 430 million. 
 
¶5.  (C)  FM Huang told the Director that he still might 
insist on resigning to allow President Chen a free hand to 
manage this latest crisis, but by end of day the absence of 
Taiwan media coverage on this side show suggests Huang will 
stay on, at least for now.  Comment: That said, a primary 
responsibility of Taiwan's foreign minister is to protect its 
diplomatic stable, so Huang will continue to face some 
pressure to step down, particularly if other alliances falter 
in the coming days. End Comment. 
 
Domestic Fallout 
---------------- 
 
¶6.  (C)  President Chen and Foreign Minister Huang have 
strongly criticized Beijing for promising an "astronomical 
amount" of money to pick off one of Taipei's longest-held, 
 
TAIPEI 00001283  002 OF 003 
 
 
staunchest allies--since 1944--in the region.  President Chen 
argued that Beijing would continue to "suppress" Taiwan and 
keep up its diplomatic offensive even if the opposition 
Kuomintang were in power.  He pointed out that PRC-controlled 
Hong Kong had denied Ma Ying-jeou a visa in 2005.  In an 
indirect reference to Ma and the KMT, Chen also asserted that 
policies of "appeasement" would fail to deter Beijing. 
 
¶7.  (C)  Opposition KMT legislators predictably rushed to 
attribute this latest diplomatic setback to inept diplomacy 
by the Chen administration, stressing the root cause was 
President Chen's confrontational approach to Beijing and 
cross-strait relations.  Legislator and former FM John Chiang 
(Hsiao-yen), grandson of former President Chiang Kai-shek, 
charged that Chen had pursued a "mistaken" foreign policy 
strategy that "enflames" Beijing, such as pushing for entry 
into international organizations like the WHO under the name 
"Taiwan."  Chiang also criticized the Taiwan Foreign Ministry 
for incompetence, predicting that another 4-5 diplomatic 
partners might defect to Beijing by the time Chen steps down 
in May 2008. 
 
The First Domino? 
----------------- 
 
¶8.  (C)  With the loss of Costa Rica, Taiwan now has 24 
diplomatic partners, down from 29 when President Chen took 
office in 2000.  MOFA officials have previously expressed to 
AIT concern that the loss of an important ally like Costa 
Rica in a region like Central America, where Taiwan held 
solid diplomatic sway, could prompt other partners there and 
in the Caribbean to bolt.  Nicaragua and Panama are commonly 
mentioned as most vulnerable.  So far Taiwan has managed to 
retain Nicaragua despite leftist Daniel Ortega's election to 
the presidency last November, in part because of Taipei's 
large investment in textiles and foreign assistance programs 
there.  To shore up relations in the region, Vice President 
Annette Lu is planning a trip next month.  President Chen is 
also planning a summit with Central American heads-of-state 
in the region later this summer. 
 
¶9.  (C)  National Chengchi University Professor Yen Chen-shen 
told AIT that countries which seek a more prominent role for 
themselves in international or regional forums have "no 
choice" but to recognize the PRC.  Yen pointed to the example 
of Senegal, which switched relations to Beijing in 2005 as it 
sought to become a leader in Francophone Africa.  Tamkang 
University Professor Kung Kwo-wei recently told AIT that each 
country in Central America has its own particular interests 
in maintaining relations with Taiwan.  If a key partner such 
as Cost Rica or Panama switched recognition to Beijing, 
however, it could encourage other Central American states to 
begin reassessing their relationship with Taipei, though they 
would be unlikely to break relations immediately, Kung 
predicted. 
 
Comment 
------- 
 
¶10.  (C)  In damage control mode, the Foreign Ministry and 
President Chen hope the public will buy their argument that 
Beijing and not the DPP administration is to blame for this 
latest diplomatic reversal.  Criticizing Beijing is good 
politics in an election year because it allows the DPP to 
score points against the opposition KMT for naivite in its 
rush to cozy up to the PRC. By detailing MOFA's diplomatic 
efforts, Huang sought to undermine the KMT argument of 
administration ineptness and also to protect his own 
position.  Other than a possible shift down the road by 
Nicaragua, Taiwan expects to hold on in Central America for 
the near term.  Nonetheless, the longer term prospects do not 
look good because the larger countries that recognize Taiwan 
will be vulnerable to the lure of a "rising China." 
 
TAIPEI 00001283  003 OF 003 
 
 
YOUNG